How to cut your home energy costs

It has never been more expensive to keep your home warm. Alex Rankine explains how to keep your home energy costs down

Keeping the house warm has never been pricier. UK wholesale gas prices have hit another record: at £3.24 a therm they are dramatically higher than the 50p level seen for much of last year, and energy suppliers are dropping like flies. Zog Energy has just become the 25th firm to go to the wall over the last four months. The renewed surge in wholesale prices means more could follow. 

If your energy supplier goes bust then regulator Ofgem will switch you to a “supplier of last resort”. Just remember to take a meter reading to send to the new supplier. Shopping around for a better deal seems pointless – as Miles Brignall puts it in The Guardian, “normally, switching would be the response to rising prices”, but “the energy market has all but seized up”.  

At present, there are no deals better than the standard variable tariff, which is price-capped, says Martin Lewis of MoneySavingExpert. A “typical” household using the cap should expect to pay £1,277 a year for gas and electricity (the cap applies to the per kilowatt [kWh] price, it does not actually cap the overall bill). 

Given soaring wholesale gas prices, that is below the level energy firms need to break even, which is why so many are going bust. Instead of switching, most people should “do nothing”, allowing themselves to go onto the standard variable tariff when their fixed deal ends (or their energy supplier goes bust). While the price cap is insulating consumers from the heat in global energy markets for now, that will change when it is next reviewed in April. With wholesale prices soaring, the cap looks likely to rise to somewhere over £1,700 a year for a typical user, an eyewatering increase. 

Where to make savings

In the meantime, what can you do to cut your energy bills? Heating accounts for more than half of an average energy bill. The Energy Saving Trust suggests keeping the thermostat at “the lowest temperature you are comfortable with… typically between 18 and 21 [°C]”, says Helena Kelly in The Daily Mail. 

Washing machines and dishwashers account for a quarter of an average household’s electricity usage. “Turning the temperature down to 30°C on a washing load can cut electricity usage by 57%.” Turning TVs and laptops off standby could save up to £35 a year. 

It can pay to invest in more energy efficient appliances, says Sarah Ingrams for Which, whose research finds that a more energy-efficient tumble dryer could save you £106 a year in annual running costs compared to the most “power-guzzling” model available, while choosing a more efficient fridge-freezer could save up to £76 a year. Replacing an old G-rated gas boiler for a modern A-rated condensing one could save someone living in a typical semi £195 a year in heating costs, or £300 in a detached house. And, while electrical heating is much pricier than gas, “if you only need to heat one room in your house, it may be cheaper to use a portable electric heater and keep the thermostat turned down”. 

Running a 3kWh plug-in heater for four hours costs about £2.26 at current prices, says Levi Winchester in the Daily Mirror. Do that every night of winter and the bills will quickly rack up. A 1.275kWh dishwasher costs 22p to run for an hour, while an electrically-heated shower costs roughly 24p “for just ten minutes of use”.  Still, if you’re feeling chilly, have a cuppa: brewing water for one cup of tea only uses about 1p of energy. 

Recommended

Julian Brigden: markets are at a huge inflexion point
Investment strategy

Julian Brigden: markets are at a huge inflexion point

Merryn talks to Julian Brigden of Macro Intelligence 2 Partners about the unwinding of the US stockmarket's super-bubble, and the risks and opportunit…
25 Jan 2022
Has growth investing had its day? Don’t be so sure
Growth investing

Has growth investing had its day? Don’t be so sure

Markets – and “jam tomorrow” growth stocks in particular – continue to crash, with some analysts forecasting a 50% drop or more. But, says Max King, a…
25 Jan 2022
A cheap investment trust with a good record
Investment trusts

A cheap investment trust with a good record

This cheap investment trust’s yield of almost 9% may look too good to be true, but should be sustainable, says Max King.
25 Jan 2022
Tax return deadline extended – but don't forget to file
Income tax

Tax return deadline extended – but don't forget to file

HMRC is being slightly more lenient about tax returns this year, but falling behind will still incur hefty fines.
25 Jan 2022

Most Popular

Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Three innovative Asian stocks to buy now
Share tips

Three innovative Asian stocks to buy now

Professional investor Fay Ren of the Cerno Pacific Fund highlights three of her favourite Asian stocks to buy now
24 Jan 2022
Ask for a pay rise – everyone else is
Inflation

Ask for a pay rise – everyone else is

As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why yo…
17 Jan 2022